Just touching the Fire Coral fungus can cause reddening or swelling of the skin, Dr Barrett said, but eating it could prove fatal.
"If eaten, it causes a horrifying array of symptoms: initially stomach pain, vomiting, diarrhoea, fever and numbness, followed over hours or days by delamination of skin on face, hands and feet, and shrinking of the brain, which, in turn, causes altered perception, motion difficulties and speech impediments," he said.
Several people have died in Japan and Korea after mistaking the fungus for an edible mushroom and brewing it into a tea for medicine.
Dr Barrett said the fungus grew on tree roots and likely occurred naturally in Cairns. There have also been reported instances of the fungus growing in Papua New Guinea and Indonesia, he said.
"This record extends the distribution of the fungus considerably, and it may be even more widespread in tropical Australia," he said.